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Any firm must carry out a consideration on international markets in order to know its position, as well as their growth potential. The global market include the indirect export which the firm is involved in, export is not involved in the control of their export products. Direct export means that the producing firm takes full control of their exports in the international markets. As regards cooperative export, firms agree with the other export marketing groups to take care of their products (Hollensen, 2007).
There are different entry modes in the indirect export type of trade which include export buying agents, broker, export house, trading company, and piggyback. In the direct export there are models of this type of the trade which include distributors and agents. These modes have some advantages, as well as disadvantages (Michael, 2009). In this type of market any of the intermediaries, who are chosen, should be motivated with the financial rewards for the volume sold and any other relevant means.
Intermediaries use different main intermediate entry modes. They include contract manufacturing which is outsourced to an external partner, who is regarded as the specialist in technological advances in producing particular products. Licensing is the mode which involves the licensor giving out rights for a certain licensee to produce certain products, but at a fee. Franchising is the next mode where a certain business is given the right to use concepts of a prominent business in its operations. The last mode is the joint venture whereby businesses make up an alliance to be engaged in the production activities which involve high risk to be barred by one company.
When choosing different intermediaries, both the external and internal factors play key role. External factors include the customer’s characteristics, which include their demographic characteristics. Nature of the product also has influence on the type of the intermediaries, since some should have a long chain of distribution, other products like prestigious goods should have shorter. How much product is needed in the market is another factor (Hollensen, 2007).
Other factors include the legal requirement of the targeted market and the level of competition in the market, which products are to be sold. However, the demand channel influences on the choice of an intermediary. For example, the costs and the length of the channel to reach consumers are some of the factors to determine which intermediary to use.
This knowledge can be applied in making the products of the company to reach the end consumers. Producing one’s own goods, this can influence which type of export market and the intermediaries to use in the chosen market (Michael, 2009).